Define: Closed Mortgage

A closed mortgage is a type of mortgage loan where the terms and conditions are fixed for a specific period, typically ranging from 1 to 10 years. During this period, the borrower is not allowed to make any additional payments or pay off the mortgage without incurring penalties.

No, with a closed mortgage, you are not allowed to make extra payments or pay off the mortgage before the end of the specified term without incurring penalties. The terms of the mortgage agreement restrict any additional payments during this period.

If you decide to sell your property before the closed mortgage term ends, you will likely be subject to a prepayment penalty. This penalty is typically a percentage of the outstanding mortgage balance and is meant to compensate the lender for the interest income they would have received if you had continued with the mortgage until the end of the term.

Switching lenders or refinancing a closed mortgage before the end of the term is generally not allowed without incurring penalties. However, some lenders may offer options to break the closed mortgage early, but this will usually involve paying a prepayment penalty.

Closed mortgages often have lower interest rates compared to open mortgages, making them more beneficial for borrowers who do not anticipate any major changes in their financial situation or the need to make additional payments. However, open mortgages offer more flexibility as they allow borrowers to make extra payments or pay off the mortgage without penalties.

Yes, at the end of the closed mortgage term, you can renew the mortgage with the same lender or choose to switch to a different lender. However, it is important to review the terms and conditions of the renewal offer to ensure it aligns with your financial goals.

Generally, changes to the closed mortgage agreement during the term are not allowed. The terms and conditions of the mortgage are fixed for the specified period, and any modifications would require the lender’s approval, which may involve penalties or fees.

In most cases, closed mortgages are not transferable to another property. If you sell your current property and purchase a new one, you will need to apply for a new mortgage for the new property.

At the end of the closed mortgage term, you have the option to pay off the remaining balance without incurring any penalties. However, it is important to check the terms of your mortgage agreement to ensure there are no specific conditions or fees associated with paying off the mortgage at the end of the term.